Starting Oct. 1, the Federal Housing Administration says it will charge homebuyers a 1.75% upfront mortgage insurance premium on single-family loans and a 3% upfront premium on FHA Secure loans for delinquent borrowers. Borrowers with loan-to-value ratios above 95% will pay a 55-basis-point annual premium. Borrowers with LTVs of 95% or less will pay a 50-bp annual premium. A recently passed housing bill requires the FHA to abandon risk-based pricing for 12 months. So the agency has notified lenders that it is temporarily returning to standard pricing. Before July 14, the FHA charged a 1.5% upfront premium and a 50-bp annual premium on all single-family loans. The agency is raising the premiums to reflect higher loss rates and higher risks of refinancing delinquent borrowers. The upfront premium for existing FHA borrowers to refinance will remain at 1.5%.

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